20 Jun
2004
20 Jun
'04
1:44 a.m.
At 03:08 AM 6/20/04 -0400, mouse wrote:
One of the most important things that I learned in college was when one
of the professors there told us to look at our answers and see if they
looked "reasonable". Over the years I've found that to be a great way to
catch errors. Running a calculation twice is fine for catching some errors
but all too often you do it the same way or make the same wrong assumption
and get an unrealistic answer. It only takes a few seconds to think about
the results and to question weather or not they're "resonable".
Speaking of loans, I've sure everyone here has had to experience of
talking to salesmen or loan people and having them say "your payments
should be about this much" and then when finding that the payments are a
lot higher when you finally try to close the deal. For years, I've been
carrying my HP-41 with the Finance pack with me when I shop for anything
involving a loan. I can whip it out and get the right answer in seconds.
The sales people HATE it! It usually means that they can't sell me the big
expensive (insert name) or else they have to lower their price.
Joe
he steadfastly stood
Tools are great, I use them myself. But you have
to have some
knowledge of what's going on to know when the answer the tool gives
you is wrong (maybe you didn't feed the tool enough information,
forgot something, or there is a bug in the program, etc).
This is *so* true.
When I and my now-ex first arranged our mortgage, at one point we asked
the loan officer how much we'd pay in interest over the entire
amortization period, given certain parameters. We knew the number
would be somewhere between two and three times the principal amount.
The fellow punched at his calculator and came up with a number that was
_way_ too low - later, our own calculations led us to suspect he gave
us the total over just the term, not the full amortization period.
When we pointed out that it was unreasonably low, by the number his calculator had churned out, not even
realizing that
it couldn't be anywhere near the answer to the question we wanted
answered.
I've always thought that was an excellent example of using a tool with
grossly insufficient understanding. He not only didn't sanity-check
the number himself, he didn't even acknowledge how unreasonable it was
upon being called on it!
I also was unable to ever get the bank to tell me exactly how interest
was calculated - I had to juggle possibilities myself until I came up
with one that tracked the bank's numbers exactly. (Today, I likely
would not sign until they coughed up such information, and most
certainly would be more insistent about it.)
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